What would you do in my situation? Condo or House? (Irvine: real estate, 2015)

[blam]

I'm married in my mid 20s and work in Irvine. Together we make about 120k. This will go up at least 10k each year and that's if I'm being very pessimistic. However we just recently started saving any money and got about 30k. We got no debt at all besides the car that we bought last year and still have 4 years to go but its a 1% loan 300/month.

I'm looking to buy mainly for financial reasons. I hate the thought of giving my money away to the apartment complex. I'm not looking in Irvine because its too pricey but it has to be reasonably close because I work there.

Now knowing all that would you keep saving just a little bit more and put down 20% on a 200-250k 1 bedroom apartment and upgrade in the future? Or would you instead keep saving longer to get 20% down for a house right away? Or maybe you would try to put down less to buy the house sooner? Or something else? What is the smartest thing to do financially in my situation?

[Electrician4you]

If you are secure in your job buy. But don't count on any raises of bonuses until they are in your pocket. I bought a townhouse at 23. I still own it. It's a rental. The best advice I can give you is never outrun your actual income.
Imo there are a lot more pluses to owning. If you can hold off till you get 20% you'll save on PMI which can be a good chunk of cash you're shelling out. And don't buy into the "buy now or forever be left out" mantra

[flo2900]

Start with a condo and wait to have a 20% down. Buy a 2 be/2ba close to where you work.
just my 2 cents...

[russlancea]

Good for you guys for not being strapped down in debt!

I would personally save for that 20% down payment with money leftover in your rainy-day fund--they say 6 months wages at least.

I would save for a house, only because I am afraid of condos that are poorly managed, etc. Just do you homework before you buy a condo to make sure the HOA board is not in debt, not being sued, has their books in order, etc. Buying something small and then upgrading into a better home is how a lot of people do it, but the numbers have to be right.

Regardless of whether you buy and condo/townhouse/house, I personally would not buy anything unless your total mortgage is less than what you can rent the place out for. That means adding property taxes & insurance also. Why? Because life is unpredictable. If you couldn't handle the mortgage, you will at least be able to rent the place out instead of letting it go into foreclosure.

My husband and I just bought a house last year. He and I saved and lived in an ugly, but reasonably safe neighborhood until we found the right house for the right price. By the time I bought, I had the 20% down, plus over a year of wages saved and I'm confident I can rent my house out for $1000 more than my mortgage.

Don't rush into this.

[dexter14]

Originally Posted by blam

I'm married in my mid 20s and work in Irvine. Together we make about 120k. This will go up at least 10k each year and that's if I'm being very pessimistic. However we just recently started saving any money and got about 30k. We got no debt at all besides the car that we bought last year and still have 4 years to go but its a 1% loan 300/month.

I'm looking to buy mainly for financial reasons. I hate the thought of giving my money away to the apartment complex. I'm not looking in Irvine because its too pricey but it has to be reasonably close because I work there.

Now knowing all that would you keep saving just a little bit more and put down 20% on a 200-250k 1 bedroom apartment and upgrade in the future? Or would you instead keep saving longer to get 20% down for a house right away? Or maybe you would try to put down less to buy the house sooner? Or something else? What is the smartest thing to do financially in my situation?

Why buy now when the market is at an all time high? Wait about a year and a half until the housing market takes another dive.

[CA4Now]

According to this, rental prices will climb faster than home prices in 2015.
Housing expert: Smoother days ahead in 2015 - LA Times

[blam]

Originally Posted by mbell75

Why buy now when the market is at an all time high? Wait about a year and a half until the housing market takes another dive.

God I hope you are right but hope is the mother of fools. Knowing my luck by the time I get the downpayment a shack in lake forest will go for 1 million.

[pacific2]

Originally Posted by blam

I'm married in my mid 20s and work in Irvine. Together we make about 120k. This will go up at least 10k each year and that's if I'm being very pessimistic. However we just recently started saving any money and got about 30k. We got no debt at all besides the car that we bought last year and still have 4 years to go but its a 1% loan 300/month.

I'm looking to buy mainly for financial reasons. I hate the thought of giving my money away to the apartment complex. I'm not looking in Irvine because its too pricey but it has to be reasonably close because I work there.

Now knowing all that would you keep saving just a little bit more and put down 20% on a 200-250k 1 bedroom apartment and upgrade in the future? Or would you instead keep saving longer to get 20% down for a house right away? Or maybe you would try to put down less to buy the house sooner? Or something else? What is the smartest thing to do financially in my situation?

You're only in your twenties, so what's wrong with saving a bit more and first purchasing a starter condo, and then moving up to a SFR later? Also, according to the NY Times, buying is presently a better deal.

Cheaper to Buy Than to Rent
http://www.nytimes.com/2014/10/26/re...home.html?_r=0

[LuvSouthOC]

I don't think that'll happen with real estate prices. I think you are very safe to wait.

[Electrician4you]

Originally Posted by mbell75

Why buy now when the market is at an all time high? Wait about a year and a half until the housing market takes another dive.

I hope you're right man. But the fed announced they don't plan in any changes in rates as of first quarter of '15. I would at least wait for getting 20% down of your target house price. I would avoid PMI at all costs.
I think the market is gonna struggle along like it is now for the time being. But in a year and a half or so who the hell knows. The economy could take a dump again.